Getting Rich Is Glorious

By Lemieux, Pierre | Regulation, Winter 2012 | Go to article overview

Getting Rich Is Glorious


Lemieux, Pierre, Regulation


How China Became Capitalist

By Ronald Coase and Ning Wang

256 pages; Palgrave Macmillan, 2012

[ILLUSTRATION OMITTED]

A 2010 GlobeScan opinion poll shows that more Chinese (67 percent) than Americans (59 percent) strongly or somewhat agree that "[t]he free market system and free market economy is the best system on which to base the future of the world." Most analysts never suspected that the communist giant would, in three decades, become a capitalist (or near-capitalist) country and go from one of the poorest countries in the world to the second largest economy and the largest trading nation.

PIERRE LEMIEUX is an economist in the Department of Management Sciences of the Universite du Quebec en Outaouais. He is the author of The Public Debt Problem: A Comprehensive Guide (Palgrave-Macmillan, forthcoming January 2013).

In How China Became Capitalist, Ronald Coase (the Nobel laureate in economics, who will celebrate his 102nd birthday a few days after this review appears) and Ning Wang (professor in the School of Politics and Global Studies of Arizona State University) chronicle how China realized this incredible feat. For the non-initiated-and perhaps for the student of Chinese affairs, too--their book is full of surprises.

How was the miracle accomplished? The short story is that it was done simply by letting individual incentives work, by allowing people to try and get rich on the market. Deng Xiaoping, one of the main Chinese political leaders from 1978 to the early 1990s, had a mantra: "getting rich is glorious." "[L]et some people get rich first," he also famously said. Nian Guangjiu, an illiterate man who had been twice convicted of street peddling, took the idea seriously and, four years after Mao's death, became one of the first Chinese millionaires, amassing his fortune by selling watermelon seeds. It is fascinating that this simple idea apparently escaped the development economists who spent much of the 20th century devising economic models, foreign assistance proposals, and government schemes to kick-start economic growth in underdeveloped countries.

Central planning | Coase and Wang's study of institutional change is informed by economic theory, as any empirical or historical research must be:

   What we have attempted is mainly a historical
   narrative of the chain of actions that brought
   [the market transformation]
   about. But there is no way to present
   a coherent narrative of Chow
   China became capitalist without
   certain theoretical perspectives.
   Facts have to be selected and their
   significance assessed. Neither can
   be accomplished without proper
   guidance from theory.

[ILLUSTRATION OMITTED]

The Great Helmsman, as Mao was called, had only contempt for academic learning. He rejected the traditional role of Confucian intellectuals who, according to Coase and Wang, provided a check on power. Mao's successors professed to be influenced by facts ("seeking truth from facts") and not theories, but their implicit theories must have been better than Mao's because they correctly identified the reasons for poverty: central planning and the crushing of individual initiative.

A la Hayek, Coase and Wang remind us why central planning does not work. Without market prices, information on relative scarcities cannot circulate and provide the right incentives. Moreover, state minions are motivated to hide problems (and their own failures) from central bureaus. The absence of a free press adds to this wall of silence. Coase and Wang remind us that "the Ultimate rationale for the market is human frailty." The failure of central planning had disastrous consequences in China. During the Great Leap Forward (1958-1961), which created a famine that killed 30 million people, the Chinese government was pushing farmers to produce unusable steel in backyard furnaces. Without prices, who knew that more wheat was needed? …

The rest of this article is only available to active members of Questia

Sign up now for a free, 1-day trial and receive full access to:

  • Questia's entire collection
  • Automatic bibliography creation
  • More helpful research tools like notes, citations, and highlights
  • Ad-free environment

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Default project is now your active project.
Project items

Items saved from this article

This article has been saved
Highlights (0)
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

Citations (0)
Some of your citations are legacy items.

Any citation created before July 30, 2012 will labeled as a “Cited page.” New citations will be saved as cited passages, pages or articles.

We also added the ability to view new citations from your projects or the book or article where you created them.

Notes (0)
Bookmarks (0)

You have no saved items from this article

Project items include:
  • Saved book/article
  • Highlights
  • Quotes/citations
  • Notes
  • Bookmarks
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited article

Getting Rich Is Glorious
Settings

Settings

Typeface
Text size Smaller Larger Reset View mode
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Full screen

matching results for page

Cited passage

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited passage

Welcome to the new Questia Reader

The Questia Reader has been updated to provide you with an even better online reading experience.  It is now 100% Responsive, which means you can read our books and articles on any sized device you wish.  All of your favorite tools like notes, highlights, and citations are still here, but the way you select text has been updated to be easier to use, especially on touchscreen devices.  Here's how:

1. Click or tap the first word you want to select.
2. Click or tap the last word you want to select.

OK, got it!

Thanks for trying Questia!

Please continue trying out our research tools, but please note, full functionality is available only to our active members.

Your work will be lost once you leave this Web page.

For full access in an ad-free environment, sign up now for a FREE, 1-day trial.

Already a member? Log in now.